The Securities and Exchange Board of India (SEBI) on Friday announced that Real Estate Investment Trusts (REITs) will now be classified as equity-related instruments for investments by mutual funds and specialised investment funds (SIFs), effective January 1, 2026.

Key Highlights:

Infrastructure Investment Trusts (InvITs) will continue to be classified as hybrid instruments.

Existing REIT holdings in debt schemes and SIF strategies as of December 31, 2025, will be grandfathered, though asset managers are encouraged to divest gradually based on market conditions.

The Association of Mutual Funds in India (AMFI) will update the scrip classification list to include REITs, and mutual fund companies must issue an addendum to update scheme documents — this will not be treated as a fundamental change.

REITs can be added to equity indices only after July 1, 2026.

This move is aimed at promoting higher participation in REITs by providing greater flexibility for equity investments and aligning regulatory frameworks with market trends.